India to become the second Largest Economy by 2050
Indian Economy
The best barometer of country’s economic standing is measured by its GDP. India, the second most populated country of more than 1100 million has emerged as one of the fastest growing economies. It is a republic with a federal structure and well-developed independent judiciary with political consensus in reforms and stable democratic environment .In 2008-09 India’s economy-GDP grew by 6.5% due to global recession. In the previous four years,economy grew at 9%.The Indian economy is expected sustain a growth rate of 8% for the next three years upto 2012. With the expected average annual compounded growth rate of 8.5%, India's GDP is expected to be USD 1.4 trillion by 2017 and USD 2.8 trillion by 2027. Service sector contribute to 50% of India‘s GDP and the Industry and agriculture sector 25% each.

Investment Opportunities In Indian Infrastructure  

The robust current growth in GDP has exposed the grave inadequacies in the country’s infrastructure sectors. The strong population growth in India and its booming economy are generating enormous pressures to modernize and expand India’s infrastructure. The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. More than USD 475 bn worth of investment is to flow into India’s infrastructure by 2012. No country in the world other than India needs and can absorb so many funds for the infrastructure sector. With the above investments India’s infrastructure would be equal to the best in the world by 2017.

In the next five years planned infrastructure investment in India in some key sectors are (at current prices): Modernization of highways -US$ 75 billion, Development of civil aviation US$ 12 billion, Development of Irrigation system- US$ 18 billion, Development of Ports-US$ 26 billion, Development of Railways- US$ 71 billion, Development of Telecom- US$ 32 billion, Development of Power -US$ 232 billion. Thus in the eleventh five year plan ,investment in the above sectors (Aviation infrastructure ,Construction infrastructure, Highway infrastructure ,Power infrastructure, Port infrastructure ,Telecom infrastructure ) will be US$ 384 billions(Rs 17,20,000 Crores) considering the huge infrastructure market potential in India. In addition to the above, investments to the tune of  US$ 91 billions have been planned in other infrastructure sectors like Tourism infrastructure  ,Urban infrastructure ,Rural infrastructure, SEZs ,and water infrastructure and sanitation infrastructure  thus making the total infrastructure investments in the eleventh plan period 2007-08 to 2011-12 as US$475 billions. Domestic and global infrastructure funds have exposure to Indian infrastructure sectors.

Infrastructure sector targets for Eleventh five year plan ending 2012

Electricity: Additional power generation capacity of about 90,000 MW , reaching electricity to all un-electrified hamlets and providing access to all rural households through Rajiv Gandhi Grameen VidyutikaranYojna (RGGVY)
National Highways:  Six-laning 6,500 km of Golden Quadrilateral and selected National Highways, Four-laning 6,736 km on North-South and East-West Corridors, Four-laning 12,109 km of National Highways, Widening 20,000 km of National Highways to two lanes, Developing 1000 km of Expressways, Constructing 8,737 km of roads, including  3,846 km of National Highways, in the North East
Rural Roads: Constructing 1, 65,244 km of new rural roads, and renewing and upgrading existing 1, 92,464 km covering 78,304 rural habitations.
Railways: Constructing Dedicated Freight Corridors between Mumbai-Delhi and Ludhiana-Kolkatta, 10,300 km of new railway lines; gauge conversion of over 10,000 km and doubling, Modernization and redevelopment of 21 railway stations, Introduction of private entities in container trains for rapid addition of rolling stock and capacity, Metro rails and world class stations
Ports: Capacity addition of 485 million MT in Major Ports, 345 million MT in Minor Ports, construction of jetties and berths, Port connectivity ,channels deepening and port equipments.
Airports :  Modernization and redevelopment of 4 metro and 35 non-metro airports, Constructing 7 Greenfield airports, Constructing 3 airports in North East, Upgrading CNS/ATM facilities ,Establishing training facilities and MRO
Telecom and IT : Achieving a telecom subscriber base of 600 million, with 200 million rural telephone connections, Achieving a broadband coverage of 20million and 40 million internet connections
Irrigation:  Developing 16 million hectares through major, medium and minor irrigation works
Urban Infrastructure: Urban renewal projects for selected cities; one million plus cities, state capitals and places of historical, religious or tourist importance under Jawaharlal Nehru National Urban Renewal Mission (JNNURM).
Rural infrastructure :As per Bharat Nirman  action proposed in rural infrastructure for irrigation, roads, housing, water supply, electrification and telecommunication connectivity
Construction and Real Estate infrastructure :Development of residential and retail real estate ,Green buildings ,construction of SEZs, Infrastructure projects, Infrastruture facilities for Common wealth games 2010
Mining Infrastructure :Mineral exploration,Mineral extraction,processing ,technology and equipments .

Investments in infrastructure sectors to create demand:
The estimated infrastructure investments in India over USD475 will create demand for Power equipment , Construction equipment ,Material Handling equipment ,Electronic and IT systems ,Environment technologies ,Transport equipment , EPC contracts, Infrastructure companies in India ,Financial services ,Real estate ,Education and training ,Design and Planning services , Infrastructure consultants , Advisory and professional services  and provide opportunities for investors, contractors, o&m contractors, developers of infrastructure projects ,foreign players.

Infrastructure policy in India:
Major policy initiatives such as deregulation, viability gap funding ,India infrastructure finance company, Committee on infrastructure ,rural infrastructure programme , National urban renewal mission, public private partnerships, Launch of private sector infrastructure funds have been implemented in infrastructure sector

Road Policy in India: Indian infrastructure  policy on roads permit duty free import of high capacity and modern road construction equipments, complete tax holiday for any 10 consecutive years out of 20 years. Longer concession periods of up to 30 years are permitted as per the roads policy of India.

Airports Policy in India: Indian airport infrastructure policy permits 100% tax exemption for airport projects for 10 years, 100% equity ownership by Non Resident Indians (NRIs), 100% foreign direct investments (FDI) in India in existing and Greenfield airport projects, Airport policy of India also allows 49%FDI and 100% NRI investment in airport transport services.

Ports Policy in India: As per Indian port policy all areas of port operation open for Private Sector Participation .Private sector participation and JVs now permitted. Ports policy of India also allows 100% income tax exemption for a period of 10 years.

Power Policy in India: Indian power policy permit 100 percent FDI (except atomic energy) in electricity generation, transmission, and distribution and trading, Establishing power plants without any license, transmission services for Independent power transmission companies.

Oil, Gas and mining Policy: 100% FDI permitted for mining (except coal). CASs, levied earlier on crude production, has been abolished for the blocks offered under NELP. In deepwater exploration royalty for areas beyond 400m bathymetry will be charged at half the prevailing rate. In petroleum and natural gas sector 100 FDI is permitted except refining ,subject to sectoral regulations; and in the case of actual Trading and marketing of petroleum products, divestment of 26% equity in favour of Indian partner/public within 5 years .In refining 100% FDI is allowed in private companies and 26% FDI allowed in Public sector companies.

Real Estate Policy in India: Corporate tax exemption of up to 100% for industrial parks, SEZs and housing projects are permitted as per Indian Real Estate Policy. 

Telecommunication Policy in India: 74% FDI is allowed in Basic and cellular, Unified Access Services, National/International Long Distance, V-Sat, Public Mobile Radio Trucked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS) and Other value added telecom services, ISP with gateways, radio paging, end-toend bandwidth. 100% FDI is permitted in ISP without gateway, infrastructure provider providing dark fiber, electronic mail and voice mail, subject to the condition that such companies shall divest 26% of their equity in favor of Indian public in 5 years, if these companies are listed in other parts of the world as per the Indian telecommunication policy.
Why India -India at a glance- Attractive Destination
India has a population of 1.1 billion. More than 30% of the world’s youth live in India. More than 55% (550 million) of the India’s population is less than 25 years of age. This is nearly twice the total population of the United States. India’s urban population constitutes around 30%. India is a nation growing younger (population in working age group projected to increase) as the developed world faces the problem of aging. India has a huge reservoir of English speaking, skilled and relatively inexpensive manpower with over 2.6 million engineers (degree and diploma holders), 814,000 software professionals, growing every year. It also got a well developed banking system, with over 67,000 branches and banking practices conforming to international best standards with net non performing assets ratio for all commercial banks 1.2%. It has a sophisticated, well regulated capital market with 23 stock exchanges of which the two largest, the National Stock Exchange and Bombay Stock Exchange ranked as no 3 and 5 in the globe by number of transactions. India has more billionaires than China. This year there were 15 billionaires in China but last year in India, there were 20 billionaires, according to the Forbes magazine. Forty-four per cent of Top 100 Fortune 500 companies are present in India. Some of the fortune companies present in India are ABB, Accenture, Alctel, AMD,ANZ, APC, Bosch, CSC, Citibank, Caterpillar, CA, Delphi, Dell, Dupont, Digital , Delloitte ,Ford,HSBC,Hyundai, Google,Intel,GE, Oracle ,Microsoft , Nokia, Siemens. India is the fourth largest economy in terms of purchasing power parity, the tenth most industrialized country in the world, the tenth largest economy in the world in terms of GDP and is one of the fastest growing developing economies today in the world. The most remarkable feature of its impressive growth story, especially over the last decade and a half, is that it has happened in a solid, democratic environment, making the process sustainable. The present infrastructure in India is grossly inadequate for the 1.1 billion populations. To improve the infrastructure of India, large investments have been planned by Indian government. 
Infrastructure Potential in India:
Ports infrastructure in India:
India has a long coastline of 7,517 km. The existing 12 major ports control around 76 % of the traffic. Due to globalization, India’s ports need to gear up to handle growing volumes. A number of the existing ports have plans for expansion of capacities, including addition of container terminals. The government has launched the National Maritime Development Programme, to cover 276 port projects (including related infrastructure) at an investment of about INR 600 billion by the year 2012. Also, States are increasingly seeking private participation for the development of minor ports, especially on the west ports.
Indian ports are projected to handle 875 million tones(MT) of cargo traffic  by 2011-12  as compared to 520MT in 2004-05.There will be an increase in container capacity at 17%  CAGR.Cargo handling at all the ports is projected to grow at 19 per cent per annum till 2012. Planned capacity addition of 545 mt at major ports and 345 mt at minor ports. Port traffic is estimated to reach 1350 million tones by 2012 .Containerized cargo is expected to grow at 18 per cent per annum till 2012. Projected Investment in major ports $16 billions and minor ports $9billion during 2007-12.
Airports infrastructure in India:
Passenger and cargo traffic slated to grow at over 20% annually and set to cross 100 million passengers per annum by 2010 and and set to cross cargo traffic of 3.3 million tonnes by 2010.Mumbai and Delhi airports have already been handed over to private players.Kolkata and Chennai airports will also be developed through JV route.
Railways Infrastructure in India:
Indian Railways is the largest rail network in Asia and worlds second largest under one management. Indian Railways comprise over one hundred thousand track kilometers and run about 11000 trains every day carrying about 13 million passengers and 1.25 million tones of freight every day. The scope for public private partnership is enormous in railways, ranging from commercial exploitation of rail space to private investments in railway infrastructure and rolling stocks.  The Golden quadrilateral is proposed to be strengthened to enable running of more long distance passenger trains and freight trains at a higher speed. Programmed also envisages strengthening of rail connectivity to ports and development of multimodal corridors to hinterland. Construction of 4 mega bridges costing about US$ 750 million is also included in the programme.Construction of a new Railway Line to Kashmir valley in most difficult terrain at a cost of US$ 1.5 Billion and expansion of rail network in Mumbai area at a cost of US$900 million has also been taken up. Freight traffic is growing at close to 10% and passenger traffic at close to 8% annually. Railways have planned a dedicated rail freight corridor running along the railways Golden Quadrilateral (GQ). The double-line freight corridor is expected to evolve systematic and efficient freight movement mechanisms and ease congestion along the existing GQ. It would leave the existing GQ free for passenger trains. The 9260 km dedicated freight corridor to be built at a cost of Rs 60,000 crore (US$ 15 billion) is being funded partially with a US$ 5 billion loan from Japan. The work is expected to be completed within the next 5–7 years. The first phase of the project would include the Delhi–Howrah and the Delhi–Mumbai routes.
Power Infrastructure in India:
Presently the installed capacity of electric power generation stations under utilities stood at 130000MW and in the five year plan the generation capacity is planned to be increased to 2,20,000 MW by 2012.There is a 13% peaking and 8% average shortage of power  annually. Central government has already taken steps to increase capacity by building Ultra mega power projects (UMPPs).There is a plan to increase Nuclear power capacity from 3900MW currently to 10000 MW by end of 11th plan.
Telecom Infrastructure in India:
Even with the rapid growth of telecom sector in India, the rural penetration is still less than 5%. At 500 minutes a month, India has the highest monthly 'minutes of usage' (MOU) per subscriber in the Asia-Pacific region, the fastest growth in the number of subscribers at CAGR of more than 50%, the fastest sale of a million mobile phones (in one week), the world's cheapest mobile handset  and the world's most affordable colour phone. 
Highways and Roads infrastructure:
The Indian road network has emerged as the second largest road network in the world with a total network of 3.3 million km comprising national highways (65,569 km.), State highways (128,000 km.) and a wide network of district and rural roads. The US tops the list with a road network of 6.4 million km. Currently, China has a road network of over 1.8 million km only. Out of the 3.38 million Kms of Indian road network, only 47% of the roads are paved. Roads occupy a crucial position in the transportation matrix of India as they carry nearly 65 per cent of freight and 85 per cent of passenger traffic. Over the past decade several major projects for development of highways linking the major cities have been planned – and work started on most of them. What is of significance is that private sector involvement (BOT projects) has finally been found to be feasible in the Indian context. This has led to an accelerated growth in this sector – which had long been faced with financial constraints. This has also facilitated improvement in the quality of the new highways and introduction of the latest concepts for toll collection, signages etc. The process of development of the new highways is expected to continue for many years to come.
Construction Infrastructure in India:
Construction accounts for nearly 7 per cent of Indian GDP and is the second biggest contributor (to GDP) after agriculture. Construction is a capital-intensive activity. Broadly the services of the sector can be classified into infrastructure development (54%), industrial activities (36%), residential activities (5%) and commercial activities (5%). The main entities in the construction sector are construction contractors, equipment suppliers, material suppliers and solution providers. India’s construction equipment sector is growing at a scorching pace of over 30 per cent annually--driven by huge investments by both the Government and the private sector in infrastructure development.  It is estimated that there is USD860 billion worth of construction opportunities in India
Oil, Gas –Hydrocarbon Infrastructure in India
With the exponential increase in the population of vehicles and industrial requirement, the consumption of petrol products is likely to increase to 300 MMT by the year 2010. India has established geological reserves of more than 6 billion and exploration acreages are available on offer on continuous basis. It is estimated that investment over the next 10-15 years shall be in the range of US$ 100-150 billion. Additional refining capacity of 110 million tonnes shall be required by 2010. Opportunities have emerged in business areas linked to Natural Gas. Private opportunities also exist in infrastructure like jetties, storage tanks, movement of oil and petro-products. Oil import constitute largest share of total import and therefore Government has taken many initiatives to mitigate the situation and attract the foreign investors.100% foreign investment has been allowed in this sector. Deregulation and de-licensing has been done for the petroleum products. Rationalization of pricing has taken place by decontrol and import parity. Private sector can import most products, pipelines, terminals and tank ages cleared for private investment. JV can be formed for the development of infrastructure, marketing and, refining activities.

NEW INSTITUTIONAL MECHANISM FOR PPP
The creation of world class infrastructure would require large investments in addressing the deficit in quality and quantity. , it is necessary to explore the scope for plugging this deficit through Public Private Partnerships (PPPs) in all areas of infrastructure like roads, ports, energy, etc. Given the risks involved in large projects the government has realized that only public sector involvement with central government development assistance for infrastructure projects is not adequate to meet the challenge. Recognizing the imponderable risks, which infrastructure projects entail, with long gestation periods, high costs and budget constraints, the government has proposed a flexible funding scheme, which will find support from budgetary allocation to fund public-private-partnerships (PPPs) for infrastructure projects. The government has proposed India Infrastructure Finance Company (IIFC) and formulated a scheme to support PPPs in infrastructure. As part of this scheme, PPP opportunities are to be awarded through competitive bidding in a transparent manner and for each project, performance is to be assessed against easily measurable standards, based on unambiguously defined criteria, in order to inspire confidence among investors.
Recently, legal and regulatory changes have been made to enable PPPs in the infrastructure sector, across power, transport, and urban infrastructure. For example, the Electricity Act allowed for private sector participation in the Distribution of electricity in specified area(s) of the distribution licensees under the role of a “franchisee”. The recognition of the franchisee role is a significant step towards fostering PPP in the distribution of electricity. In some cases, the impact of private sector involvement in terms of end-user benefits has been felt almost immediately. A case in point is the initial Build-Operate-Transfer (BOT) experience at Jawaharlal Nehru Port, where the Minimum Guaranteed Traffic requirement at the end of 15 years, identified as part of the concession agreement, was met in just 2 years. The experiment is being replicated across other major ports as well.

Special Economic Zone (SEZ) – A New Policy
The Government of India has announced a pragmatic “SEZ” policy, which offers several innovative fiscal and regulatory incentives to developers of the SEZs, as well as the units within these zones. Each SEZ is treated as a foreign territory and units located in it are not subject to either customs tariffs or domestic duties. Sales to Domestic Tariff Areas are permitted, subject to payment of applicable customs duties and import policies in force. Inputs, whether imported or sourced domestically, are free of any taxes. So are exports made from a SEZ. The only requirement is that the SEZ and the units located within it are positive foreign exchange earners. This offers foreign companies tremendous opportunities for taking full advantage of Indian strengths in doing business in India. This could be either as the developer of the SEZ or as a unit in a SEZ or both. Presently, the board of approvals for the SEZs granted formal approvals for 340 SEZs. These 339 SEZs today have lands for development. It is widely expected that the Special Economic Zones approved for various parts of the country, once implemented, would contribute substantially to India's exports and would help connecting the missing links in manufacturing. These zones aim at providing an internationally competitive and hassle free business environment for promotion of exports.